Friday, September 12, 2014

More Details About the Molycorp Financing $MCP

A correspondent writes in about the details of the Molycorp financing, which have finally been disclosed:

The interest goes to 12% cash pay on 6/15/16 unless the 2016 notes have been paid off or exchanged for equity.

There are two springing maturity dates to make sure the 2016 and 2017 bonds don’t get paid off first.

There is a fairly ugly make whole on the term loan that starts at 43% of principal in year 1 and drops by 10% a year thereafter.

The lease agreement on the sale lease back is a 5 year full payout lease with a huge balloon payment in year 5.  Starts at 10MM in year 1 rises to 12MM in year 5 and has a 179MM payment at the end of the lease.  If the 2016 notes aren’t paid off on time, the lease payments shift forward by an undisclosed amount.

There is full ratchet anti dilution protection on the warrants in the first two years and weighted average protection in the last three years.

One final factoid, $27.5MM of the proceeds are going to buyback 2016 and 2017 notes held by Oaktree – they’ve got no interest in being exposed to the nether regions of the capital stack.
As I mentioned, the lenders also got $28 million in free warrants.

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